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A FTSE 100 dividend stock I’d buy with this Neil Woodford growth star

I’ve long been a fan of Schroders (LSE: SDR), particularly on account of its brilliant dividend prospects.

And I retain my bullish take on the FTSE 100 business even if trading performance hasn’t been as robust in recent months. Back in April, the asset manager advised that total funds under management and administration slipped £9.6bn during the three months to March, to £426.1bn. Both asset and wealth management totals declined in the quarter, it noted.

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It’s not clear whether fund outflows or an adverse performance, or both, were responsible for the quarter one decline, so share pickers didn’t react negatively to the update. Still, with Schroders’ share price still down 11% from just three months ago, I reckon stock pickers are still missing a great opportunity here by not piling in en masse.

Fund favourite

The financial colossus may be suffering from the impact of adverse market conditions since the turn of 2018, but this is likely to prove just a footnote in the company’s long-term growth story.

Schroders has delivered excellent, sustained earnings expansion for many years now. As my fellow Fool writer Ian Pierce was eager to point out recently, the firm’s manoeuvres to bolster the strength of its asset classes, as well as moves into hot growth territories across North America and Asia, look set to keep profits on an upward slant.

Indeed just this week, Schroders splashed out to acquire pan-European hotels investment and management specialist Algonquin, which currently boasts assets under management of €1.8bn. The takeover significantly boosts the Footsie firm’s Real Estate unit, which primarily focuses on offices, retail, logistics, self-storage and large multiple-use sites.

A go-to dividend grower

It shouldn’t surprise, therefore, that City brokers are also expecting dividends to keep rising at a fair lick, either — Schroders has already hiked the annual payout by 95% over the past five years.

Current estimates suggest that, although a 2% earnings reversal is forecast for 2018, its bright outlook should give the company the confidence to hike the dividend to 113.2p per share, from 113p last year.

Moreover, supported by a 5% profits uptick in 2019, Schroders is expected to lift the dividend again to 119.4p. These projections mean investors can enjoy chubby yields of 3.4% and 3.6% for this year and next, respectively.

The cat’s whiskers

What’s more, Schroders can be picked up on a cheap forward P/E ratio of 15.1 times, sealing the investment case, in my opinion.

But the blue chip behemoth isn’t the only share I would buy today. Neil Woodford-championed Softcat (LSE: SCT) may not be packing the sort of value as the asset manager — it trades on a forward P/E multiple of 29.3 times right now — but I believe its excellent revenues prospects make it worthy of a top rating. Group sales charged 25% higher during the six months to January, to £472.8m.

City analysts are expecting profits to gallop 12% and 8% higher in the years to July 2018 and 2019, respectively, and I can see the software giant continuing to report robust growth long after this period as the ongoing development of its office network drives business from new and existing customers alike.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.